Welcome to the third in our series of Beyond Brexit podcasts.

Today we're discussing the outlook for the UK economy, inflation, growth, the government's

industrial strategy and the possible impact of trade negotiations.

I'm Gayna Bagley, PWC's Head of Corporate Purpose, and I also chair our EU steering committee. And I'm joined by Andrew Sentence, PWC's Head of Corporate Purpose, and I also chair our EU Steering Committee.

And I'm joined by Andrew Sentence, PWC's Senior Economic Advisor.

So, Andrew, after the vote to leave the EU in June, it feels like the UK economy has held up better than expected.

So what do you feel is the short-term outlook for the UK economy?

Well, I think you're quite right, Gaynor. The UK economy has done much better than I think many economists expected. But actually as we look back on that, I think we can explain it quite well.

First of all, the consumer has kept spending because wages have been increasing faster than inflation.

The worries about uncertainty affecting investment are not yet coming through, but they may

still come through. And the world economy has held up reasonably well.

And it's also worth pointing out that the political situation which looked very rocky after the referendum result as actually stabilized.

So it's true that the UK economy has performed quite well in the last six months of 2016,

but it's still reasonable to expect slower growth in 2017 and 2018.

And so we're expecting about one and a half percent growth in 2017 and 2018. And so we're expecting about 1.5% growth in those two years as inflation comes through and

squeezes consumer spending and the investment uncertainty does have some impact on the growth

of the economy.

Yes, okay, that's interesting.

So actually it's shown in the short term we've probably been a little bit more resilient,

almost emotionally and politically, than we thought that's had an impact on the economy. You mentioned inflation. So what do you think is the long-term outlook for inflation? Do you see significant increases in inflation?

We're certainly set for a period of higher inflation that we've had over the last two to three years. Inflation came down to zero in the UK and in a few months it was actually slightly negative

a year or two ago.

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